India’s long-neglected retail market is turning into one of the world’s hottest thanks to Warren Buffett, Jeff Bezos and a frenzy of billion-dollar dealmaking.

Walmart Inc. just wrapped up a $16 billion agreement for control of the country’s leading e-commerce player, Flipkart Online Services Pvt., while Bezos’ Amazon.com Inc. negotiates deals with a large supermarket chain and an investment in a prominent retail conglomerate, according to local media. This week, Buffett’s Berkshire Hathaway Inc. agreed to acquire a stake in the company behind digital payments leader Paytm.

Why the sudden interest in India? The new optimism is fueled by rising standards of living, increases in smartphone usage and cheap data plans that are boosting internet penetration across the nation. Perhaps most important, India is the last big retail market still up for grabs, with an internet economy projected to double to $250 billion by 2020.

"It’s a race for leadership,” said Anil Kumar, the Bangalore-based chief executive officer at researcher RedSeer Consulting. "There’s far more action in India compared with stable markets like China and the U.S."

Online sales grew 23 percent last year and are up 40 percent so far in 2018, according to RedSeer. The organized retail market is under-penetrated, leading to tie-ups between online and offline players, and driving unprecedented levels of investments, Kumar said.

India’s vast retail industry has no parallel other than, perhaps, China. But unlike the Chinese market, dominated by Alibaba Group Holding Ltd., India is relatively open and largely unconquered, offering global players vast opportunity to grow.

India is now the world’s fastest growing major economy, and per capita incomes have been climbing steadily. According to a Forrester Research Inc. report earlier this month, the South Asian country is the world’s fastest growing e-commerce market.

Amazon and Flipkart have cornered about three-quarters of the online Indian retail market, but other big players are getting aggressive. That’s meant heavily discounted offerings for consumers, although the substantial investments have crimped profitability.

When Walmart announced the Flipkart deal earlier this year, S&P Global Ratings changed its outlook on the U.S. retailer to negative, saying that Flipkart was poised to generate losses in the next few years.

“The appeal of retail lies in the population of India, the aspirations of India, the consumption power of India,” said Kishore Biyani, the billionaire chief executive of Mumbai-based retail conglomerate Future Group, which runs the 2,000-plus store Future Retail Ltd., including the country’s largest departmental chain.

Biyani said his group’s online revenues are nearing $150 million. He and others predict that India’s retail industry will have a unique combination of online and offline tie-ups.

Future Group is reported to have had negotiations about a stake sale with Amazon as well as Alibaba executives. Biyani refused to directly comment, simply saying he too is looking to “crack a deal like everybody else.” Amazon declined to comment and Alibaba didn’t respond to a request for comment.

India’s Reliance Industries Ltd. is also fine-tuning its own e-commerce thrust by creating a hybrid online-offline retail platform.

So far, retailers have only scratched the surface by roping in high-income customers in India’s large metropolitan cities. Rural areas and small cities offer fresh opportunity. The retail battle for Indian consumers will be on display again in early November during the festival of Diwali, India’s version of Christmas and Thanksgiving combined.

Vijay Shekhar Sharma, founder and chief executive officer of the Alibaba-backed e-commerce company Paytm Mall, says he ultimately sees wide-ranging impact from the billions pouring into the industry. He predicts that small mom-and-pop shops will soon be armed with retail technology as well as cloud and payments products.

Sharma is also the founder of One97 which runs the Paytm digital payments app. Berkshire Hathaway this week invested in One97, becoming the latest global player to bet that digital payments will surge as India’s increasingly affluent consumers shop online.

“Indian retail will get digitized at an unprecedented scale," Sharma said. "Its every nook and cranny will get altered.”

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